Fox discusses deal with Conan O'Brien

LOS ANGELES — Fox Broadcasting is inching closer to bringing Conan O'Brien back to late night.

Key Fox executives, including Rupert Murdoch, are on board with the plan and would like to finalize a deal in coming weeks so they can make a splash on May 17
when the network unveils its new fall line-up. Several significant
issues remain and the Fox talks could fall apart, according to people
close to the negotiations who asked not to be identified because the
discussions were meant to be private.

But people close to O'Brien are cautiously optimistic.

"We'll get there," one of them said Tuesday.

Fox executives have been huddling to figure out how
much it will cost to mount a late-night talk show that would be
profitable for Fox stations and affiliates. Stations, hammered by the
advertising recession, rely on the profits generated by syndicated
reruns such as "The Simpsons" and "The Office," and it's unclear how
many stations would be willing to substitute those shows for a risky
venture — even one starring a big-name host.

Fox realizes that if it ever wants to get into the late-night game, this is the time.

The network, owned by Murdoch's News Corp.,
has had its eye on entering the late-night talk show wars for years.
Indeed, it was Fox's overtures to O'Brien nine years ago that prompted NBC'sJeff Zucker to promise O'Brien the "Tonight Show" to keep him at the peacock network. Zucker's plan famously unraveled when Jay Leno decided that he wasn't ready to retire.

Fox Entertainment President Kevin Reilly and Entertainment Chairman Peter Rice
have been leading the campaign to bring O'Brien to Fox, according to
knowledgeable people. But their bosses have told them to demonstrate
that a late show would be financially viable. A breakthrough came last
week when they outlined a late-night scenario that one executive
described as "a deal that we could live with."

It hasn't been decided whether the show would launch in the fall or January.

Fox, however, is unwilling to spend the money that NBC had been paying to support "The Tonight Show" with O'Brien. NBC spent close to $90 million a year to produce the show, which included O'Brien's salary of more than $12 million a year. Fox wants to spend less than $60 million a year for the show, said people close to the discussions.

The major hurdle comes from Fox stations, which are
obligated to air reruns, including "30 Rock," at specific time periods,
in some cases after the 10 p.m. news. That would mean forcing a proposed O'Brien show, at least initially, to air at different time periods: 11 p.m. in some markets, and 11:30 p.m. — or later — in other cities.

"Without a uniform start time, it would be hard to get traction for a show and hard to promote it," said Jason Maltby,
a top ad buyer for the firm Mindshare. "Saying, 'check your local
listings' doesn't have the same ring to it as saying, ' "The Tonight
Show at 11:35 p.m." ' "

After the expiration of the stations' agreements for
sitcoms in late night, the proposed O'Brien show would run at the same
time — likely 11 p.m. The challenge would be getting to
the two-year mark by maintaining a large enough audience, and enough
advertisers, to make the show successful.

"Late night is already pretty full — everyone has
carved out their own niche," said Maltby. "It comes down to the
available audience, and how you slice it."

Fox is the likely outlet for a traditional network
late-night show, replete with a band, but it's not O'Brien's only
option, said people close to the comedian. Several cable channels have
expressed an interest, although Comedy Central — which would appear to
be a natural fit — currently is not on the list, these people said.

Comedy Central already has its big stars in late night, Jon Stewart and Stephen Colbert, so the earliest available time period for O'Brien would be at midnight.

That would not be acceptable to O'Brien, who surrendered "The Tonight Show" when NBC said it planned to shift his start time to 12:05 a.m.

O'Brien's team also is working to secure a
soundstage for a new show, and could use the same huge facility on the
Universal lot that NBC spent nearly $50 million to refurbish for O'Brien to take over "The Tonight Show" last summer. The soundstage — the home of the Jack Benny show and the original "Knight Rider" TV series — is large enough to accommodate skits, a band and a studio audience.

NBC Universal has said it would lease the space to O'Brien, despite the tensions that exploded when O'Brien refused to accept NBC's
shift of "The Tonight Show" to make room for Leno's return to late
night. But that isn't the only option. O'Brien's team has been busy
scouting other soundstages during the last two weeks.

In addition, O'Brien and his representatives have been organizing a swing through 30 cities, including Los Angeles,
for his Legally Prohibited From Being Funny on Television Tour. The
tour intends to allow O'Brien to connect with his fans at a time when
his breakup pact with NBC prevents him from appearing on television until September.